The income tax is a highly volatile revenue source for the state, said state Treasurer Andrew P. Sidamon-Eristoff. "We get hit with swings year after year." For more photos from the breakfast, click here.
State Treasurer: 10% Income Tax Cut is Good Business
The Christie administration's proposed 10 percent across-the-board income tax reduction is driven in part to help businesses whose owners pay their taxes through the personal income tax, state Treasurer Andrew P. Sidamon-Eristoff told a group of about 85 New Jersey Chamber of Commerce members this morning.
Those business owners are often in the state's highest income tax brackets, and are subjected to a tax rate that is higher than all but four states in the nation, the treasurer said at the roundtable breakfast in Monroe presented by the N.J. Chamber.
"That informs us as we promote a 10 percent tax reduction," he said. "This impacts business."
Businesses whose taxes are paid through their owner's income taxes - not the Corporation Business Tax - are mostly small firms such as S-Corps, LLC's, LLP's, sole proprietorships or partnerships.
The Christie administration is seeking support on the income tax cut proposal from the Democrat-controlled Legislature, which has proposed a pair of alternative tax relief plans.
Another problem with the state's high income tax rate for high earners is that it is a highly volatile revenue source for the state that peaks in good economic times and drops sharply in difficult times, Sidamon-Eristoff said. "That's a problem with budget planning and being competitive," he said. "We get hit with swings year after year."
The income tax rate for those who make less than $150,000 is a different story. It continues to be a significantly lower rate than those in all other states in the region, including Connecticut, Delaware, Pennsylvania, Maryland and New York, according to a chart the treasurer provided at the breakfast.
The Christie administration, meanwhile, has made headway in containing the state's property taxes, which have risen on average of about 2 percent annually the past two years, compared to about 7 percent or 8 percent increases in the previous years going back to 2000, he said.
"That means we are getting to the underlying forces that push up property taxes," he said. "We would like to see all the state taxes go down."
For photos from the breakfast, click here.
Thank you to Raymond James for sponsoring the breakfast.